Acer, Inc. (TPE:2353) was a shining star of the netbook era, but the Taiwanese company enjoyed a tepid 2011 as the ultra-mobile consumer electronics market shifted towards tablets. Unable to sell users' on the merits of the Iconia line of tablets, Acer tried to sacrifice its bottom line for sales, raising product quality at the expense of margins. This year has proved more of the same -- while Acer has offered compelling product, it continues to languish under poor margins and large losses.

The Asian OEM's build quality push has allowed it to maintain anemic growth in the face of the netbook flop, evenas rivals like Dell, Inc. (DELL) and Hewlett-Packard Comp. (HPQ) stumbled. But it wasn't enough to allow Acer to keep pace with regional rivals like Lenovo Group, Ltd. (HKG:0992) and ASUSTek Computer, Inc. (TPE:2357) who posted large double-digit growth numbers.

In the third calendar quarter, Acer continued to exhibit poor results, earning a weak T$68M ($2.32M USD) versus the analyst consensus of T$756M ($25.8M USD).

The root cause was interestingly not the past source of issues -- netbook declines and margin struggles. Rather, the company reportedly missed its targets as it was forced to pay a 34 percent effective tax rate, versus its expected 20 percent rate. Acer also reportedly lost T$100M due to currency fluctuations (forex/"foreign exchange").

[Image Source: Boy Genius Report]

The big picture appears to be that Acer has reversed its troubling losses of last year, but is facing new fires, even as it works to put out those that were previously plaguing it.

Acer's Q3 revenue was T$104.4B USD ($3.57B USD), up more than 11 percent from a year ago. But on a 9-month basis Acer's revenue has fallen roughly 5.7 percent from a year ago.

Assuming that Acer is able to get a grip on its new concerns -- tax rates and currency issues -- the holiday season should prove a key test for Acer. The OEM has the opportunity to restore some of its luster by shining in Windows 8 device sales. But if its critical decisions -- such as the choice to forgo Windows RT (ARM) product -- backfire and sales prove weak, Acer could see its reputation further marred.

Lenovo and Apple have excellent hardware. Though the screens on the Lenovo laptops are shite. The tablets use IPS now, finally.

Lenovo was smart. They bought the Thinkpad line from IBM and instead of watering it down to make more money, they improved it a bit. They also added their entry level Lenovo laptops (not Thinkpad brand) to compete with the likes of Acer and HP. Dirt cheap but still better quality than the shite from Acer and HP. Ugh.